Exam 13: Pricing Concepts

Deena operates a coffee shop located near the university campus. Recently, Deena decided to raise the price of all the products she sells. According to the law of demand, Deena can expect:

Breakeven analysis is an effective tool for marketers in assessing the sales required for covering costs and achieving specified profit levels.

What are the major weaknesses of traditional breakeven analysis?

Firms with a prestige pricing objective are most likely to:

Javier is the business manager at his college. In his role, Javier makes a lot of business decisions. Javier has installed a vending machine in a dorm for soft drinks. The machine rents for $200 a month and the electrical use is minimal. Javier buys soft drinks for $.25 each and charges $.75 each from the vending machine. Currently, the machine has a sales volume of 400 cans a month. What is the current profit or loss from the machine?

A firm can price its items at the same price as competitors, or try to sell its products at a price higher than its competitors. To sell at a price higher than the competition, a firm would need to:

Champagne is a product with considerable mystic. There is rarely a James Bond movie where he does not drink some Champagne with a beautiful woman! Champagne is typically associated with the "finer things in life." However, even among Champagnes, some are special - often just by the pricing strategy taken. For example, Dom Pérignon Rose Gold in the 6-liter bottle is priced at nearly $50,000, assuring this Champagne is perceived as "the finest thing in life." Dom Pérignon is using:

Breakeven calculations insure that both fixed and variable costs and are covered.

Walter White is a pharmaceutical distributor. Walter takes a cost-based approach to pricing his products by tripling his price for each of his products. For example, products that Walter imports from Mexico for $2, he sells for $6. What is Walter's markup percentage?

A firm with $50,000 in fixed costs, selling price of $25 per unit, and variable costs of $5 a unit has a contribution margin of:

A firm has $50,000 in fixed costs, a selling price of $25 per unit, and variable costs of $5 a unit. If the fixed costs are reduced to $40,000:

Fixed costs typically include items such as:

Items such as raw materials and labor costs, which change with the level of production, are known as:

Value pricing is a common approach for fast food restaurants.

A firm can reduce its breakeven volume by:

Overall organizational objectives and more specific marketing objectives guide the development of pricing objectives, which in turn lead to the development and implementation of more specific pricing policies and procedures.

The breakeven point is the point at which:

Vandelay Industries manufactures a range of latex products. Vandelay recently purchased new equipment to manufacture latex gloves for the medical community. The new machinery costs $70,000 and can produce 40,000 pairs of gloves each day. The raw latex material for each pair of gloves costs $.03 and Vandelay sells the gloves at a wholesale price of $.10 a pair. Considering only the cost of the new equipment, how many pairs of gloves does Vandelay need to sell to pay for the new machinery?

Maddie noticed that many students on campus had t-shirts and sweatshirts with Greek organization letters or club names on them. Recognizing that there was a huge market for this attire, Maddie rented a store front and a silk screening machine to get into the t-shirt business. Maddie's rent is $1,000 a month, including utilities. The silk screen machine leases for $300 a month. Maddie can buy blank t-shirts for $4 each and sweatshirts for $10 each. Maddie calculated the cost of materials for the silk screening at $2 per unit. If Maddie sells a screened t-shirt for $20 and a sweatshirt for $25 each, which would she prefer the customer purchase?

Which of the following actions is most likely to be taken by a company in order to implement the value pricing objective?